5
Budget 2020
Scottish income tax rates and bands
Savings and dividend income are taxed using UK rates and bands.
2020/21
2019/20
Band £
Rate %
Band £
Rate %
0 - 2,085
19
0 - 2,049
19
2,086 - 12,658
20
2,050 - 12,444
20
12,659 - 30,930
21
12,445 - 30,930
21
30,931 - 150,000
41
30,931 - 150,000
41
Over 150,000
46
Over 150,000
46
Welsh income tax rates
Although income tax for Wales has been devolved, Welsh resident taxpayers continue to pay the same overall rates as taxpayers in England and Northern Ireland.
Employment Taxes National Insurance thresholds
The government has recently announced National Insurance thresholds for 2020/21. Most thresholds will rise with inflation. Two thresholds, however, will rise by 10% from £8,632 to £9,500:
y y the primary threshold - which sets the level at which employees start to pay Class 1 National Insurance contributions (NICs)
y y the lower profits limit - which sets the level at which the self-employed start to pay Class 4 NICs.
The upper thresholds which apply to these two classes of NICs remain at £50,000.
Comment The secondary threshold, which sets the level at which employers pay the main rate of NICs, only rises in line with inflation. Off-payroll working in the private sector The changes to the off-payroll working rules (commonly known as IR35), which came into effect in April 2017 for the public sector, will be extended to the private sector from April 2020. Draft legislation has been issued. The new rules apply to payments made for services provided on or after 6 April 2020. The off-payroll working rules apply where an individual (the worker) provides their services through an intermediary (typically a personal service company) to another person or entity (the client). The client will be required to make a determination of a worker’s status and communicate that determination. In addition, the fee-payer (usually the organisation paying the worker’s personal service company) will need to make deductions for income tax and NICs and pay any employer NICs. Only medium and large businesses will be subject to the 2020 rules, so small businesses will not need to determine the status of the off-payroll workers they engage. A small company is one which meets two of these criteria: its annual turnover is not more than £10.2 million: it has not more than £5.1 million on its balance sheet: it has 50 or fewer employees. For unincorporated organisations it is only the annual turnover test that applies.
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